Under Rule 37A of the Central Goods and Services Tax Rules, the Goods and Services Tax Network ( GSTN ) has introduced a mechanism for the reversal of Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) when the supplier fails to file the GSTR-3B return within the GST Portal.
Here are the key details and implications of Rule 37A and the updates in GSTR-2B:
Reversal Requirement: If a supplier fails to file their GSTR-3B return for a particular tax period by the 30th of September following the end of the relevant financial year, the recipient must reverse the corresponding ITC. This ensures that ITC claims are only available when suppliers fulfill their GST return obligations.
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Suppliers must file their GSTR-3B return by 30th September of the following financial year.
If the supplier does not comply, the recipient has to reverse the ITC by 30th November ( or 20th November, the due date for October’s GSTR-3B ).
Reclaiming ITC: Once the supplier files their GSTR-3B, the recipient can reclaim the reversed ITC in future tax periods. This reclamation is reported in the relevant sections of GSTR-3B ( Table 4B and Table 4D ).
GSTR-2B Update: Auto-Population of ITC Reversals under Rule 37A
The recent update on the GST portal now allows GSTR-2B to auto-populate ITC reversals under Rule 37A. This simplifies the compliance process for taxpayers, enabling them to easily identify and reverse the ITC linked to suppliers who have not filed their GSTR-3B.
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Identify Non-Compliant Suppliers: Taxpayers should review their GSTR-2B statement for September 2024 to identify suppliers who have failed to file their GSTR-3B for the relevant periods.
Follow-Up with Suppliers: It is advisable to communicate with the non-compliant suppliers, urging them to file their GSTR-3B before the taxpayer files their October 2024 return to avoid ITC reversals.
Reversal in GSTR-3B: If any supplier fails to file their GSTR-3B by the time the recipient files their October GSTR-3B, the taxpayer must temporarily reverse the ITC in Table 4B(2) of their return.
Reclaim ITC: Once the suppliers file their pending returns, the taxpayer can reclaim the reversed ITC by reporting it in Table 4B(5) and reflecting it in Table 4D(1) in future GSTR-3B filings.
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This new feature aims to streamline the filing process for taxpayers by reducing manual input and improving accuracy in ITC reporting. Taxpayers are encouraged to regularly check their GSTR-2B and validate the data reflected in GSTR-9 using the new utility for smooth filing.
Read More: GSTN releases Important Advisory on GST Annual Returns GSTR-9 and GSTR-9C
The assesses were to earlier reconcile the ITC claimed in FORM GSTR-3B with the information shown in FORM GSTR-2A as per sub-rule (4) was inserted into Rule 36 of the Central Goods and Services Rules, 2017 ( “the CGST Rules” ) w.e.f. October 09, 2019.
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